3 Practical & Safe Ways To Succeed In Passive Forex Trading

28/07/2018

Estimated Reading Time: 12minutes

Forget About FX Own Trading, Not Working, Make The Best Traders Work For You

“Life is what happens while we’re busy making other plans.”said by John Lennon

As you know John Lennon is a founding member (and the person who actually brought down the axe to destroy the group rather than Paul McCartney who is said to decide it – Top 10 Unpleasant Facts about John Lennon) of The Beatles, who have sold over 600 million records worldwide and were named by Rolling Stone as the greatest artist of all time. John made fortune in his life (his net worth was supposed to be $800 million ). I’m not sure if making money was other plans or the happened life in his perspective, but unfortunately his real life ended on December 8 1980. He was murdered by Mark David Chapman who remained at the scene reading J. D. Salinger’s novel The Catcher in the Rye until the police arrived and arrested him at the entrance to The Dakota mansion in New York city where John lived.

However, John’s money life did not end but has been still continuing. According to Forbes, he was ranked 5th in (the Top-Earning Dead Celebrities in 2011 ). He keeps earning over $10 million of royalties every year after he died without doing anything.

This is the power of Passive Income and obviously we would like to get it while we’re still living. The smart way is to use the best talent & expertise of other people.

I don’t agree with what Salinger said in The Catcher In The Rye as People are always ruining things for you, and there are many people who build good things for you.

Brief guide of Three Great & Safe Passive Forex Trading

1) You have Want To Learn needs. Trading Forex will automatically make you pay much more attention to global politics, economies and general money market, which will obviously take your financial literacy into the next level. I know what you want to say next, correct, I am not asking you to trade by yourself, however believe me that once you put your own money into FX market, your attention to the said subjects will increase rapidly, therefore your knowledge will improve dramatically, consequently you may expand your friends & networks automatically.

2) You need something that has little correlation with popular financial assets such as Stock or Bond which people usually have in their portfolio (Stock and Bond has little or negative correlation each other, means when stock goes south bond is not necessary to go south or even go north, that’s why combination of stock and bond is good), and Forex is said to be little / no correlation to both Stock & Bond, thus it’s perfect for risk aversion, simply Don’t put all your eggs in one basket as a fundamental notion of Portfolio Diversification.

3) You require huge liquidity that is a factor you often fail to take into account in critical times such as marriage or university funding for a dependent, and retirement etc. The liquidity refers to the accessibility of your asset, which can be measured as the time to arrive into your pocketbook if you happen to need it today. It usually relates to the size & participants in the market. See the below chart which makes you realize how big the FX market is, means liquidity is probably the best in all financial products.

Source: babypips.com

Now, let’s have a look at FX market a bit further;

Forex Market

Forex – foreign exchange market (Forex, FX, or currency market) is a global, worldwide over-the-counter financial market for trading currencies. Structure wise, it is a decentralized inter-bank market and main participants are central banks, commercial & investment banks, hedge funds, and corporations & private speculators. The foreign exchange market determines the relative values of different currencies and the spot market accounts for over one-third of daily turnover. As seen in the above chart, Forex is one of the largest financial markets in the world with over $5.0 trillion average daily turnover, that is over 12 times the average daily turnover of global equity markets. FX market used to be traded only among banks & institutional traders. But due to the development of user friendly trading platform and proliferation of on-line FX brokers who offer the trading environments for individual traders, number of individual traders have constantly been increasing.

However, given the nature of Zero-Sum Game (remember because of the nature, it is Recession Proof Sector, means whatever & however the total economy changes, it doesn’t affect this market), for every winner there should be a loser. It is said that only 5% of the traders make a consistent profit, experts win, while inexperienced novices always lose. For this particular points which is actually very important, suggest you read; Scientist Discovered Why Most Traders Lose Money – 24 Surprising Statistics;& Why FX Trader Loses So Much Money? Here is A Solution;Having said, the best way to make money in FX market is using the professionals’ expertise, which will also allow you to make this opportunity Passive. On top of the 3 reasons I listed before, there are many benefits of FX trading such as;

Low transaction cost

However, you also consider fundamental risks of;

On-line Scams / Enemy Broker etc.

I will issue exclusive article to discuss Enemy Broker and allow me to remind you of the On-Line Scams here as a Basic Safety before moving into 3 FX passive methods.
As said in my previous article, it’s widely believed that over 97% of on-line programmes offering high-yield returns in pooled fund structure are scams. They disguise and tantalize you with easy profit which you should never consider as a good income opportunity. Therefore it’s better to stay away from any schemes you leave your money to other people’ entire control and focus on the schemes allowing you to make your money 100% under your own control.

Forex Managed Account – PAMM

Forex Managed Account is the form of alternative investment a money manager trades the foreign exchange market on a client’s behalf for a fee.
Managed Trading Account contains a portfolio of securities that is owned by an individual investor means you yourself directly own, but are chosen and traded by a hired professional money manager on your behalf (100% Passive) – trading can be managed by human namely discretionary trading, or automated technique such as using robot that can eliminate all emotion. In Managed account, any of your money never leaves from your hand but all are kept in your brokerage account under your own name. You grant permission to the experienced traders to access to your account so as to trade on your behalf. Keep it mind that the permissions you grant are limited to trading only and he cannot deposit any extra fund to the account or withdraw from your account which is usually specified in the LPOA (Limited Power Of Attorney) contract you sign (see the right image as an example of FinFX), so let me stress that you are the proprietor of the account (Ponzi Free). Generally speaking, for minimum investment, most brokers will need at least $100k and more to agree to work only for you., which is a big entry barrier for normal investor, then the new technology called PAMM will help you.

PAMM Account

PAMM — Percentage Allocation Management Module

Percentage Allocation Management Module is a new technological solution allowing the trader on one trading platform to manage simultaneously unlimited quantity of managed accounts. Depending on the size of the deposit each managed account has its own ratio in PAMM. There are few other software featuring the same function as PAMM, such as LAMM & MAM, see the brief description of all 3 popular software as;

– PAMM (Percentage Allocation Management Module) distributes gains, losses and fees on an equal percentage basis. In this way all accounts regardless of size obtain the same percentage returns.

– LAMM (Lot Allocation Management Module) allows the trader to allocate different trade lots to each investor’s account. This grants the trader the flexibility to use different leverages for different types of investors.

– MAM (Multi-Account Manager) is a combination of the features found in a PAMM and LAMM, and offers more flexibility to the trader managing investor accounts.

Trader’s activity results (trades, profit and loss) are allocated between managed accounts according to the ratio. To elaborate on how it works, your account is just electronically connected to the trader’s master account by the above software, means that every time a trade is taken you get a duplicated order electronically into your account. The traders cannot steal your money, as it is firewalled by the brokerage house to prevent this from ever happening. The bottom-line is that the PAAM allows small investors to enjoy the security & return of managed account, theoretically the system can accept from a cent, and in fact some PAMM trader permits the investment from $1. Note that the investors should open their accounts in the same brokerage where the trader manages to use PAMM, means usually you can’t choose your own broker by asking the trader to use it for managing your account. Anyhow, under PAMM, you don’t need to learn how to trade forex or any forex trading strategies, but need to select the best money manager who trade forex for you. Regarding how to select the best PAMM, please check Ultimate Guide (7 Secrets) To Find Best PAMM Trading – Part (1) & Part (2);

Social Network Copy Trading

Social trading is another way to utilize the expert’s knowledge & skill in trading FOREX. It builds on the notion that the collective wisdom of thousands of traders is better than the wisdom of one. By connecting traders from all over the world into a network and sharing their views and trades real-time, investors can use that information to make social rather than fundamental or technical trading decisions. You as an ordinary trader can either use this “social” information to make your own decisions and trades (i.e. self-trade) or decide to automatically follow and copy one or more traders (i.e. auto-trade), and the latter is what we focus as 100% passive trading. In order to make it workable, we need a common platform called social trading network. It is the glue that connects all the traders and trade followers, similar to Facebook or Twitter. You can view & analyze the performance of real live traders and you can also automatically copy the trades in your account from the traders you decide to follow. In fact, the social trading networks companies that provide the platform initially focussed on the idea-sharing between traders by creating a profile including trading strategies & performances to connect like-minded traders all over the world, which made the network provide the real-time trading feeds from the traders. Because the networks shares a transparent actual performance, it motivates social trading companies to allow investors to automatically follow the trades from traders they believe to be profitable. So, it is in a sense trading signal sent automatically from selected professional trader, which are automatically copied and execute the exactly same trading in your account.
In Forex trading, as shown in the previous reports, it’s said that only around 5% trader constantly makes money, and the beauty here is the above networks allow you to search such successful traders and copy their trades.

Copy or Mirror Trading

Mirror trading refers to a relatively sophisticated system & trading style where you automatically copy trades executed by a variety of auto-trading and signal services, which generally suits large volume traders. Copy trading is similar to mirror trading and enables you to directly copy a trade or a trader you want to follow, which is virtually an alternative to mirror trading and a better suited to small scale / novice traders. In copy trading you can select individual traders to copy, whether by copying their individual trades or by copying their entire trading strategy. Therefore, you can assign a percentage of your account balance to follow a specific trader or several traders concurrently. As long as you are copying a trader, every trade which they open will be replicated by a copy trade in your account. Generally speaking, the copy trading is said to be a simpler and more flexible way to trade socially. Again, you don’t need to participate in any forex trading courses / study complicated fores strategies, but just need to choose the top trader in the social trading communities.
The advantage of the copy trading in comparison to the managed account / PAMM is a cost. While you need to pay certain % (usually against the net prfit) to the trader who manage your account in managed account, you basically don’t pay anything to the trader in the copy trading because they are compensated by the social trading companies that provide the platform. Visit GEM Social & Copy Trading;, to find the details of 2 most popular & established Social Trading Networks.

Forex Robot

A Forex robot is a piece of software that analyses the market based on settings entered by the user. In other words, the user does not need to make any trading decisions.
Essentially it is referred to as a robot because it mimics all of your actions, only it takes mistakes that are inherent to human emotion out of the picture.Profitable Forex traders usually buy and sell currencies throughout the day (similar to day traders with stocks), thus a Forex trading robot can be extremely valuable because the software will manage all your trades in every way from start to finish.
A Forex robot makes automated trades that can be carried out even as you sleep.
Forex trading robots usually allow Forex traders to input the currencies they would like to trade, their long-term trading goals, prices at which to trade, and so on. For investors whose profit margins can change in the blink of an eye, being able to immediately capitalize on price changes is extremely vital. The program is automated so as to recognize potential for profit, then automatically buy or sell. Forex robots make all of their trades based solely on the numbers. Their algorithms look at a wide variety of daily, semi-daily, and long term trends. A forex robot makes a trade based on what is most likely to achieve a profitable end result. When it loses a little it doesn’t panic and end up flushing away even more cash; when it wins big it doesn’t waste the winnings on the emotion of excitement, thinking that it can win again and again today only to end up losing it all. With that said, properly programmed, a robot can manage all aspects of one’s trading operations to make profitable trades more times than not. Forex robots are a good way to trade a mechanical system that requires no human evaluation.
The industry-leading forex trading platform is MetaTrader. Because of its versatility and simplicity of use, most of forex brokers across the world offer MT-4 as a trading platform for its customers. An robot is written in MetaQuotes Language 4 (MQL 4), the built-in programming language of MT-4. Therefore, the most common type of forex robot is designed for the Metatrader, and is often referred to as a “forex expert advisor“, “forex EA”, or just “EA“, or simply bots. Metatrader expert advisors can take control of your trading account and make trades according to whatever parameters you set. Fx robot eliminates the major weakness which holds traders back from becoming successful, i.e., human emotions. As any seasoned trader will tell you, the frail human emotions of fear and greed are a trader’s arch enemy and the cause of most traders’ failure. People tend to ‘feel’ when they are speculating upcoming changes rather than study charts, look at trends, and base their trades on solid numbers. People also tend to react to large loses, and even gains, by making forex trades that they would normally never even consider. This is where forex robots step in to provide solution, simply removing the psychological element of trading, which can be detrimental. It is important to note that there is no such thing as the “holy grail” of trading systems, whether automated or not. There are profitable forex robots out there. The problem is that it takes testing over a reasonable period of time to figure out how profitable they are. Most of the companies and individuals that sell these robots, are great about writing sensational claims, but the customers soon find out that the forex robot is not as claimed. Therefore, as explained in the managed account chapter, the most important element is choosing the reliable robot, for this particular point, please read 5 Easy Steps To Find The Best FX Robot (EA);

Summary

Allow me to repeat, trading Forex and making money from it is a hard task, being a good trader requires a lot of study and work by doing homework on the markets every day, watching the markets for an opportunity and carefully entering into a trade. This arduous process is repeated for every trade, day after day. It is a lot of work and is very stressful. So, it takes a lot of practice and analytical thinking to become a successful trader and what if a collection of such analytical thinker made all your trading decision – this is the core concept behind the 3 methods here, using experts’ expertises regardeless of human or robots.
So, let’s summarize the key characteristics / benefits we discuss in this article are as follows:Own control

only you, the owner of the account can deposit and withdraw funds at any time

the owner can revoke the right of the investment manager to trade the account

the owner may close the account at the end of any trading week

Transparency

the owner has real time access to their account and can view all trading activity taking place therein

Each trader claims own proprietary trading systems or strategies, but never ever forget that there is no such thing as the “holy grail” of trading systems. Beware exaggerated sales pitch.

Benefits & Drawback

Adding substantial diversification to an investment portfolio. Forex is also said to be low correlation to those achieved by stock and bond investments.

The biggest advantage over any of investment products is Huge Liquidity comes from its enormous market size & transaction volumes.

The downside is general high risk caused by extreme high leverage allowed in Forex margin account.

Social Copy Trading and Robot’s advantage over managed account is simply lower cost.
Managed account trader commonly charge over 30% commission against profit. But as briefly touched before, you don’t pay any fee to the trader you copy in the social trading and most robots (there are also robots that charge monthly subscription fee) cost you only one-time expense that is average a few hundreds $.

Finally, John Lennon wrote “Nothing is real and nothing to get hungabout” in the song Strawberry Fields forever, well we are living in the real world and there are so many things we have to worry about though, start developing Passive Money may help us reduce things to worry about.

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